Over the years merchant service providers have adopted the merchant cash advance as a great alternative to saving small business owners from having to go through the process of getting a business loan from a bank. In the past, the way merchants would get a merchant cash advance would be to go through a simple application process and approved merchants would receive a lump sum of cash as an advance on future credit card processing revenue. However, times have changed and merchant service providers have come to the realization that they can leverage other payment processing services to also provide merchant cash advances. As matter of fact, the quickest growing trend in merchant cash advances is using merchants ACH processing revenues as leverage instead of credit card processing.
Is a merchant cash advance through ACH Processing different?
There is no significant difference. The biggest difference is that you do not need to process credit cards in order to get a merchant cash advance. Merchant service providers will now look at your historical ACH processing statements in order to evaluate the amount of the advance they are willing to provide. Like any other merchant cash advance, you will go through the same simple, quick, and easy application and underwriting process. Approved merchants will have their cash advance transferred to their bank account at which time they can use it for whatever they need to improve their business. This could be but is not limited to:
- Purchasing Inventory
- Paying Vendors
- Hiring Employees
- Marketing or Advertising Dollars
- Purchasing Equipment
- Covering Expenses
- Ease Cashflow Restrictions
- Increase Liquidity
How do I repay my merchant cash advance?
Repayments are a percentage of every ACH processing transaction and are taken out with each approved transaction moving forward. This is determined in such a way that the advance is paid back over a short-term period usually ranging anywhere from six to twelve months. The time period could fluctuate depending on how much the business transacts over the given months.
One advantage of this type of repayment system is that it is automated making it less stressful to merchants because they don’t have to worry about month-end payment deadlines. Another advantage is the repayment amount is a fixed percentage of each transaction. So not only are you repaying your loan with each sale; you also won’t feel the potential pain of having to repay a set lump sum during slower months. Likewise, busier months will pay the cash advance off quicker.
More about Merchant Cash Advances through ACH Processing
Getting a Merchant cash advance through ACH processing offers great financial flexibility to merchants. They don’t need any assets as collateral and there are no stipulations, preconditions, limitations, or restrictions to what you can and can’t use the advance for as long as it’s used for the business in question. These are some of the same benefits merchants experience with a standard merchant cash advance; the major difference being that one repays through card transactions tied to a credit card merchant account and the other repays through an ACH processing merchant account.
It’s easy to understand why merchants are weary of taking out a traditional small business loan from their local bank. The terms and conditions of these loans can onerous on a merchant in a number of ways. One such issue could be the immediate need to make an emergency equipment purchase or repair but the borrowed funds are earmarked so that they can only be used to purchase inventory or explicitly state merchants cannot use funds for equipment or equipment repairs. Probably the most stressful circumstance would have to be the requirement to pay a set amount at month’s end but business is slow and the merchant finds themselves scrambling to make the payments in order to avoid heavy interest and late fees for nonpayment or in the worst cases avoid default. Whatever the case may be, with such loans there is no flexibility for the small business merchants trying to live out the American Dream.
Flexibility is a major reason why more businesses are turning to merchant cash advances and even more are using there ACH processing to get a merchant cash advance. The ability to spend how you deem appropriate, pay in-line with monthly sales, and keep liability to a minimum is worth the cost of the merchant cash advance before the advance is given when compared to a small business loan.
One of the payment processors providing merchant cash advances through credit card merchant accounts and ACH processing accounts is Painless Processing. Not only do they provide these services, but they also provide these services to high risk merchants or high risk businesses. To learn more about getting a merchant cash advance contact Painless Processing. They have merchant cash advance experts readily available to explain the process and answer your questions. Contact them today and find out how they make getting a merchant cash advance so easy… it’s Painless!